Topic: Daily Advice
Jimmy Carter’s Legacy and Investment Opportunities in the Trump Era
Below is the most-recent letter Pat McKeough sent to his Portfolio Management clients in February 2025.
“When I was a child, I remember a common one-liner you’d hear at the funerals of people who had survived to ‘a ripe old age’. It came in many variations:
“Old Mike just wanted to live until his son came home from overseas…
“Dear Marge wanted to survive until her first grandchild was born…
“Sam and Lily just wanted to find a buyer for their cottage before the year’s first snowstorm…”
I asked my mother about these comments. She said you’d hear talk like this from elderly friends and relatives. Her theory was that as time passed, people’s range of interests narrows, and it gets harder to find new ones.
“If you run out of interests, it can leave you with fewer reasons for living.”
The concept came to my mind last December, when Jimmy Carter died. President Carter set a record for U.S. Presidential longevity, as well as being the first former U.S. President to reach the ripe old age of 100.
Mr. Carter was a ‘dark horse’ winner in the 1976 Democratic Presidential Convention. This U.S. political term refers to somebody who starts out as less well-known and/or less popular than other candidates. Mr. Carter was on the ‘less well known’ side.
He came from Georgia, a state with fewer than 5 million residents back then. After serving in the Navy in World War II, he inherited a small peanut farm. He went into state politics in the 1960s, and served as a Georgia state senator, then went on to serve one term as Georgia state governor.
He was well known in his home state, of course. But other candidates for the Democratic Presidential nomination came from bigger states and were much better known nationally. However, Carter’s years as a struggling peanut farmer gave him valuable experience in achieving success in life, through persistence and long hours on the job.
Mr. Carter beat Gerald Ford in the 1976 Presidential election, but lost to Ronald Reagan in 1980. He was the 13th U.S. President who lost in a re-election bid.
On January 21, 1977, his first day in office, President Carter fulfilled a campaign promise that he would offer unconditional pardons to the hundreds of thousands of young men who had evaded the draft during the Vietnam War by fleeing the country or by failing to register with their Selective Service boards.
Some veterans groups objected to the decision. They disapproved of letting what they saw as unpatriotic lawbreakers get off scot-free. The pardon also came under fire from amnesty groups because it didn’t go far enough – it didn’t do anything for deserters, or soldiers who were dishonorably discharged, nor for civilian anti-war demonstrators. But the general feeling was that the U.S. pulled out of Vietnam two years earlier, so let’s get over it. Jimmy felt proud to honour his promise.
During his single term in office, President Carter had to face a lot of foreign challenges including the Iran hostage crisis, the 1979 oil crisis, the Nicaraguan revolution, and the Soviet invasion of Afghanistan (which led to the 1980 Olympics boycott and the end of the détente or period of improved relations between the U.S. and the Soviet Union).
Events at home were tamer, but still troublesome. Rising crime, soaring inflation and high gasoline prices were constant problems. Record-setting environmental problems appeared as well. In 1979, Carter faced a partial nuclear meltdown at the Three Mile Island nuclear power plant near Harrisburg, Pennsylvania. Around the same time, the toxic waste disaster in the Love Canal area of Niagara Falls, New York emerged from obscurity. More than 800 families were evacuated from the Love Canal neighborhood, which was built on top of a toxic waste landfill.
The Superfund law was created in response to this disaster, which was the first of its kind. Federal money paid for demolition of about 500 poisoned houses, plus a couple of public schools, all of which had been built on top of the dump. The site was then remediated and a containment area was built for the hazardous waste.
Though this was the first time that such a process had been undertaken, Carter learned that several more potential Love Canal disasters were turning up around the country. He said that discovering such open-air, man-made health hazards was “one of the grimmest discoveries of our modern era”.
In December 1978, Carter used the 1906 Antiquities Act and his executive-order power to designate 56,000,000 acres (23,000,000 ha) of land in Alaska as a national monument.
Government Deregulation Investing: Carter’s Transformative Legacy
When Carter took office in 1977, he recognized that the regulatory sector of the U.S. government was outgrowing its intended purposes. This early understanding of government deregulation investing principles would later influence generations of policy makers.
The Interstate Commerce Commission (ICC), formed in 1887 to regulate prices charged by railways, was the first U.S. regulatory agency. As trains became more common, more technologically advanced, and subject to more rail and non-rail competition, regulation did more to keep the regulators busy than to improve transportation.
The Civil Aeronautics Board (CAB) was launched toward the end of the 1930s Depression. By the time Carter became president, the CAB had joined the ICC and several other agencies in the business of setting rates and other matters for trains, trucks, pipelines, buses and airlines. Meanwhile, complaints about regulatory agency decisions became more and more common.
President Carter soon realized that the only hope for a competitive and consumer-focused airline industry was to deregulate all aspects of the industry, apart from safety. In 1978, Carter got the deregulation process started when he signed the Airline Deregulation Act.
The CAB was abolished in 1985, after it passed on all its safety-regulating duties to the Federal Aviation Agency (FAA), which had been set up just for that purpose.
As time passed, more and more economic regulatory agencies were coming under the sway of “regulatory capture” – control by outside influences connected to the businesses that the agencies controlled/regulated. Rather than protect consumers from excessive price increases, the biggest of the regulated organizations took advantage of their size and regulated status, and the power it gave them over the regulators. They encouraged rulings that were better for the companies than the customers.
By the 1970s, old-time regulators like the ICC and CAB were being pared down to less powerful levels, if not eliminated. By the time Carter took office in 1977, however, relative newcomers to the regulatory game were becoming established and gunning for more ambitious powers.
This new generation included the better-known U.S. Environmental Protection Agency, the Occupational Safety and Health Administration, the Federal Energy Administration, and the U.S. Consumer Product Safety Commission.
Winner by Persistence
Many presidents choose to focus on some matter of high national interest when they get elected or re-elected. It helps to attract and maintain voter attention.
Some academics still refer to President Carter as “The Great Deregulator”. In his one term as President, Carter got the deregulatory trend started, but didn’t have the time or clout to make it a cornerstone of his career. If he had won a second term in 1980, he might have taken deregulation a lot further. More important, deregulation might have gone a long way after Carter’s second term ended. It might have developed a life of its own.
Here’s one more Carter deregulation milestone, by the way, little-known but unquestionably a success: In 1978, President Carter signed a bill into law “allowing homebrewing and small-scale craft brewing to operate legally”.
The new law deregulated the American beer industry by making it legal to sell malt, hops, and yeast – three key beermaking ingredients – to American home brewers for the first time since prohibition began in the U.S. in 1920. This simple deregulatory step led to an increase in home brewing over the 1980s and 1990s that by the 2000s had developed into a strong craft microbrew culture in the United States. By the start of 2022, the U.S. had 9,118 microbreweries, brewpubs, and regional craft breweries in operation.
In contrast, Canada’s first microbrewery, Granville Island Brewing, opened in Vancouver in 1984.
Marriage Made in Heaven
Jimmy Carter and Rosalynn Smith were both born and raised in Plains, Georgia, a town with fewer than 1,000 people. Jimmy was born in October 1924, and Rosalynn was born three years later, in August 1927. They married in 1946.
Rosalynn helped Jimmy win the governorship of Georgia in 1970. After she became that state’s First Lady, she decided to focus on the mental health field. She campaigned with Jimmy during his successful bid to become president of the United States in the 1976 election, defeating incumbent Republican president Gerald Ford.
She was politically active during her husband’s presidency, though she declared that she had no intention of taking on a traditional First Lady role. During Jimmy’s term of office, she supported his public policies, as well as their social and personal life. She also sat in on Cabinet meetings at the invitation of the President, and represented her husband in meetings with domestic and foreign leaders. She served as an envoy on a visit to Latin America in 1977.
Rosalynn and Jimmy campaigned together for the 1980 Democratic Presidential nomination. No longer the ‘dark horse’ that he was at his first Democratic convention in 1976, Jimmy beat his top competitor, Ted Kennedy, for the 1980 nomination.
It was something of an accomplishment for Jimmy Carter to beat a prominent member of the Kennedy clan for the 1980 Democratic Presidential nomination.
Ted Kennedy was the younger brother of President John Fitzgerald Kennedy (also referred to as JFK), who was assassinated in November 1963. Ted was far better known to the U.S. electorate than Jimmy, even before JFK’s assassination. However, Ted was also still remembered by voters for the July 1969 death of Mary Jo Kopechne. She was a passenger in his car late that night when he drove off a bridge that had no guardrails, and the car sank into a pond.
Kennedy said he swam back to shore, then dove into the pond seven or eight times but was unable to find Mary Jo in the dark. Ted only filed a police report the following morning, hours after Mary Jo’s body had been found. He was unable to explain his delay, or where he had gone after leaving the car and reaching the police station.
Carter lost the 1980 presidential election to Republican nominee Ronald Reagan, who beat him with a huge victory. No surprise there: Reagan was a former TV and movie star, as well as a one-time corporate executive, former president of the Screen Actors Guild, and a former governor of California, the largest state in the Union.
Thereafter, the Carters left politics and moved on to what you might call a life with a humanitarian or public-spirited focus.
Some People Only Hit Their Lifelong Peaks in Retirement
Subsequent polls by historians and political scientists usually classify Carter as a below-average president. However, in the post-presidency phase of their lives, the Carters seemed busier, happier, more popular and more widely known than ever.
In 1982, Carter created the Carter Center to focus on human rights internationally. He travelled around the world to support peace talks, helped keep foreign elections honest, and worked toward ending deadly diseases.
President Carter and First Lady Rosalynn Carter drew particularly broad public attention starting in 1984, when they began working with Habitat for Humanity, a non-profit volunteer group that restores/builds low-cost, affordable homes.
The Carters took a hands-on approach – donning hard hats, wielding hammers and building alongside families in need. They inspired countless others.
Over the next three decades, they worked alongside more than 104,000 volunteers around the U.S. and in 14 countries, to build, renovate and repair 4,390 homes.
In 2002, Jimmy won the Nobel Peace Prize “for his decades of untiring effort to find peaceful solutions to international conflicts, to advance democracy and human rights, and to promote economic and social development”. He also wrote over 30 books, from memoirs to poetry.
In their last decade, both Carters were afflicted with multiple, serious and terminal illnesses.
In February 2023, after a series of short hospital stays, Jimmy moved back into the family home, where he received home hospice care for the rest of his life.
On May 30, 2023, the Carter Center announced that Rosalynn Carter had been diagnosed with dementia. The statement also noted that Rosalynn continued to live at home with her husband – who was still in home hospice care at the time of the announcement – “enjoying spring and visits with loved ones”.
On November 17, 2023, Mrs. Carter also entered a program of home hospice care. Her health had been failing amid a urinary tract infection, which failed to improve with antibiotics. She died two days later at age 96, at the Carter home in Plains, Georgia.
Following his wife’s death, President Carter said, “Rosalynn was my equal partner in everything I ever accomplished.” He died 1 year, 40 days later on December 29, 2024, at the age of 100, also in the family home in Plains, Georgia.
Great Husband, Peace Lover & Deregulator
It’s possible that Jimmy Carter outlived his wife Rosalynn, based on the “common one-liner” I mentioned on the first page of this letter.
The most surprising thing is that Jimmy outlived Rosalynn by 1 year and 40 days, even though he lived in a home hospice throughout that period. That’s a long time to survive in a hospice of any kind, especially after reaching age 100.
Only 84 men have served as U.S. President. Only five of them lived into their 90s after leaving office.
In addition to being the sole President to reach age 100, much less exceed it, Jimmy Carter was the only President who went on to help restore and build homes well into retirement. That activity may have helped him achieve a post-presidency lifespan of nearly 44 years, also the longest of all former presidents.
Mrs. Carter died around 50 weeks before the 2024 Presidential election.
Jimmy might have felt an urge to stick around and see how the 2024 Presidential election ended. He was no doubt pleased that it was much more peaceful than the 2016 election, when President Trump won his first term in office and protesters demonstrated in the streets.
However, Jimmy survived for 55 more days after the 2024 election. If this was due to anything more than chance, I’d guess that he might have hung on because of a newfound interest in DOGE (short for Department of Government Efficiency).
Remember, Jimmy was an eager opponent of out-of-control government bureaucrats, as are Elon Musk and President Donald Trump.
President Trump and Mr. Musk were long past being satisfied with a slight increase in the speed of deregulation. They were looking for serious swamp-draining, as were many MAGA voters. (The ‘swamp’ is another casual term for ‘the bureaucracy’ among U.S. conservatives.)
James Freeman of The Wall Street Journal summed up the situation as of January 29 this year.
Trump Economic Policies: Americans Support Swamp-Draining
James Freeman, Wall Street Journal, Jan. 29, 2025:
“There’s much media reportage on the perils of paring the Washington bureaucracy, but Americans like the idea. There are also early signs that the dawn of the second Trump administration just might be making Americans more optimistic about the country’s future.”
“This week the Reuters/Ipsos poll finds that a full 61% of U.S. adults support ‘downsizing the federal government,’ while just 35% are opposed to the idea.”
“Not all of Mr. Trump’s specific ideas for restraining Washington are as popular, and of course it can get tricky when considering budgetary diets for specific programs. But given the outraged reaction in media circles to his early executive orders, some readers may be surprised to learn, for example, that a plurality of Americans favour ‘imposing a hiring freeze on all federal agencies,’ according to Reuters/Ipsos.”
“Pretty soon we could be talking about real money in taxpayer savings. The Journal’s Kimberley Strassel notes that “the federal government hires a stunning 200,000 to 300,000 people each year.”
Question from a long-time TSI subscriber:
“Pat, what do you foresee the effects of Trump’s 2nd term on the Successful stock picks, and what may be the corrective/pre-emptive actions? Allowing for diversification, can the allocations/stock picks be different to take advantage of your forecast of Trump’s certain moves, although they may be short term?”
The Successful Investor Answer: Trump Economic Policies Create Broad Opportunities
I do think this second 4-year Trump Presidential term will provide an above-average opportunity for investors – much like his first 4-year term, which started in 2017, 8 years ago. But I’m talking about a broad opportunity – one that may stretch right across the breadth of the economy – rather than opportunities in a handful of individual stocks that might seem likely to gain from Trump economic policies.
In particular, if the DOGE program works as well as initial findings suggest, it may usher in a higher level of prosperity throughout the U.S. That prosperity may spill out from the U.S. and into Canada and other parts of the world, creating opportunities for any Canadian investment strategy.
How will Trump economic policies affect Canadian investors portfolios?
Trump’s 25% tariffs on Canadian goods (10% on energy) will likely hurt Canadian investor portfolios through reduced GDP growth, potential recession, a weaker loonie, and significant losses in export-dependent sectors like autos, metals, chemicals, and manufacturing
It’s widely believed, with good reason, that a lot of U.S. tax money gets stolen, wasted, or abused every year. It’s thought to be siphoned off by politicians, bureaucrats and their connections and associates, inside and/or outside the government or criminal networks.
Overall, this is a highly profitable activity for participants, and a highly destructive activity for everybody else. It leaves less tax money to go toward the needs and preferences of taxpayers generally and the country, as a whole.
This continuing drain of tax money balloons U.S. deficit spending. This in turn pushes up taxes, interest rates and inflation. This cuts into the purchasing power of individuals and households, which lowers their living standards and slows economic growth.
The significant reduction or elimination of the theft of tax money would deliver a great bounty to ordinary, honest people who have lost rather than gained from the theft of tax money.
Fortunately, the extraordinary waste and theft of U.S. tax money is not well hidden. The DOGE program is just getting started, but it’s already showing impressive results. It looks as if reclaiming these stolen funds may at least offset the interest that the U.S. pays on its national debt each year. But opinion is divided.
Several decades ago, when Republicans and Democrats were on friendlier terms, they shared a casual, bipartisan goal to cut or eliminate theft, waste or abuse of taxpayer funds. Now, Democrats scoff at the idea that the DOGE initiative can eliminate much theft and misuse of taxpayer funds.
The Wall Street Journal ran a recent story about DOGE. It began with a quote from a competing newspaper:
“At Oval Office, Musk Makes Broad Claims of Federal Fraud Without Proof,” said a New York Times headline this week. The White House retorted: “Apparently, the Times and other like-minded outlets lack access to a newfangled research tool called Google.”
“No proof of fraud? How much do you want?”
“A Government Accountability Office (GOA) report last spring estimated the “federal government could lose between $233 billion and $521 billion annually to fraud.” The federal auditor said “a government-wide approach is required to address it,” and recommended that the Treasury “leverage data-analytics capabilities” to stop questionable payments. That’s what DOGE is trying to do.”
“GAO earlier estimated that 11% to 15% of unemployment benefits during the pandemic were fraudulent, totaling between $100 billion and $135 billion. Some went to transnational gangs, prisoners and state-sponsored hackers. The Labor Department inspector general estimated at least $191 billion in improper pandemic unemployment payments.”
“The Secret Service found hackers linked to the Chinese government stole at least $20 million in Covid benefits. The pandemic employee retention tax credit (ERTC) has been another ripe target. According to the Internal Revenue Service, a California prisoner claimed more than $550 million from the ERTC.”
“The IRS paused processing of new ERTC claims in 2023 because of rampant fraud. Initially estimated at $55 billion, the program’s costs have ballooned to $230 billion and counting. One culprit is outdated government IT systems that lack fraud controls such as identity verification. Agencies also don’t internally share data that could identify red flags.”
“Congress in 2021 authorized a pilot program that gave the Treasury access to the Social Security Administration’s Full Death Master File to prevent payments to dead people. The Biden Treasury last year said this prevented and recovered $31 million in improper payments and fraud over five months, which it called “just the tip of the iceberg.”
What are the best Canadian sectors that benefit from US economic growth under Trump?
Canadian technology and financial services sectors could benefit from Trump’s US economic growth through increased cross-border demand and deregulation spillovers, while energy remains the strongest beneficiary due to US dependence on Canadian oil and gas exports
Canadian Investment Strategy: Stick with our TSI Investment Philosophy
I do think this four-year term will be a good one for investors who follow our longstanding, 3-part Successful Investor stock market recommendations, which form the core of any sound Canadian investment strategy:
1: Invest mainly in well-established, mainly dividend-paying companies;
2: Spread your money out across the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer Goods & Services; Finance; and Utilities);
3: Downplay or avoid stocks that are getting excess attention from the broker/media limelight.
Our recommendations for geographical diversification have changed little since I launched The Successful Investor 30 years ago. If you have a third of your portfolio in U.S. stocks and two-thirds in Canadian stocks, we see no immediate rush to change that balance. This balanced approach remains fundamental to any effective Canadian investment strategy.
Which AI investments are safer for Canadian portfolios: established tech companies or startups?
Established tech companies are safer for Canadian portfolios than AI startups due to their proven business models, better financial resources, market liquidity, and lower volatility, while startups carry higher risks from limited operating history, funding challenges, and potential business model failure despite their higher growth potential.
The only caution I’ll stress for 2025 investing is that you should be sure to keep #3 above in mind, especially as it applies to artificial intelligence juniors or start-ups, especially those that are not yet making much if any profit.
After a deep market plunge in 2022, artificial intelligence start-ups have rebounded sharply. This has a thin but eerie similarity to the performance of computer & electronics stocks in the late 1990s, when these stocks boomed, and the second plunge many of them went through a few years later.
We only began recommending computer & electronics stocks in earnest during and after their second plunge. They’ve had ups and downs since then, but have generally been good performers.
We expect to see, and take advantage of, a similar pattern in AI. However, we’ll wait to see worthwhile corporate profits emerge before we recommend stocks in the group.
Meanwhile, we’ll keep an eye out for companies that make money from using AI technology they bought from some other company to cut their own costs and spur their long-term profit growth. This approach aligns well with both government deregulation investing principles and Trump economic policies that favor efficiency and productivity gains.
As the saying goes, the stock market never quite repeats itself, but it often seems to try.
